Digital tools that support out-of-state investing are invaluable for the millions of people living in cities like New York, California or Vancouver, Canada, where the real estate market has likely out-priced their capacity for home ownership. With these tools, investors no longer have to restrict their inventory to buy and hold deals. Global access to potential renters and home buyers are great incentives to invest in overseas vacation homes for premium rents or out-of-state fixer-upper homes for a quick flip. Less reliance on real estate agents and brokers to get the information and, in some cases, lending we need can pay big dividends in the long run.
As an investor who has used every digital tool imaginable to develop a $35 million real estate portfolio in less than eight years, I’ve learned a lot about the core responsibilities we all have — buyers and sellers alike.
First and foremost, don’t waste your time on investments that produce little or no cash flow. Use the simple, universal formula of income being greater than expenses to determine whether the investment is affordable for you. For example, if you are paying a mortgage of $1,200 per month while renting out your house at $1,500 per month, you’re earning a $300 surplus, monthly, that you can use towards other expenses like maintenance and property tax. As long as you are not conflicted with other debts, such as a second investment property that produces no surplus, you’re coming out on top.
Secondly, we must do our due diligence when it comes to researching any investment property. Although they cover a lot of ground, we cannot rely on tools like Trulia or Zillow alone for everything we need, such as the rate of income tax in a particular state or country, foreign ownership rules and tax implications in our home country.
Lastly, while Google serves as a great makeshift advisor, it is not a substitute for the army of experts that every investor needs in order to acquire and then manage a property. Use social networks like LinkedIn to recruit your team of professionals in international real estate, lending, property management, accounting and governance. As a general rule of thumb, if you can find someone who can get the job done at least 70-80 percent as well as you can, hand it over to them. This will free up time and energy for you to continue searching for your next out-of-state investment.
After you’ve identified a potential property using this advanced digital toolkit, I still suggest going onsite, viewing the property and having a discussion with the owner or their agent when possible. Investing in property is a huge commitment and there is always the risk of regret attached. In-person viewing and interaction will always hold its value in mitigating that risk and helping you weigh what to do next. Until that time, however, our 21st-century digital approach can eliminate 90 percent of the leg work required to find your ideal investment.